There’s so much to manage in your business that you might be overlooking one of the top predictors of your success — how you manage your cash flow. 

Healthy cash flow, at its simplest level, means bringing in more than goes out. Depending on your industry, economic conditions and many other factors, you might require heartier cash flow than the business down the street. 

A positive cash flow means you can do more in your business — like borrow funds, expand your product line, hire top talent, and prepare for unexpected bumps in the road. 

Beyond simply not having the cash you need to operate, overlooking this important KPI can cause big problems in your small business: 

• Stress: Without healthy cash flow, you’ll always be reacting to problems that come up — stuck in a defensive position that can leave you constantly trying to juggle the cash needs of the business. This is tremendously stressful for you and your team.
• Stunted growth: Our Fractional CFOs sometimes have to tell disappointed business owners that they just plain don’t have the cash they need to grow. Without healthy cash flow, there’s little room to take risks because the margin for error is so low.
• Poor reputation: No one wants to work with a slow-paying company — or one that doesn’t pay at all. You’ll limit the talent and vendors who are willing to work with you when you don’t always have the money you need to pay the bills.

Poor cash flow leaves you always playing catch-up

Most businesses with cash flow problems just don’t understand the concept and how to conquer it. We find that business owners think it will be easy to get capital when it’s needed, only to struggle to find a lender. And if they’re already in trouble, it might even be too late. 

Capital providers want to lend to companies with good cash flow that need growth capital, not companies that need a bailout. They want to make sure the loan will be repaid and feel more confident in companies that have already shown they know how to manage their funds.  

Strong cash flow creates a snowball effect

Companies get better access to cheaper capital when they’re negotiating from a strong cash flow position. A well-managed business will have better access to opportunities —better vendors, better employees, more investment opportunities, cheaper capital, and even a better culture. 

If your business is struggling with cash flow, you’re not alone. The Federal Reserve shared that 54% of businesses they surveyed reported navigating uneven cash flow over the last year. 

Crown CFO can help you get on the right track. Our Fractional CFOs are experienced in guiding Kansas City businesses to better financial health. Contact Mike DeMaio at mike@crowncfo.com to find out how we can help your business.